After over twenty years in the game industry, developer and Shiny Entertainment founder David Perry (Earthworm Jim, Enter the Matrix) decided to take a year off -- which meant he ended up directing six MMO’s, consulting on licenses, getting a game development degree, starting a game investment company, GameInvestors.com, and even becoming a member of the press.

He could have learned to say "no," but in his keynote lecture at the 2007 Montreal Games Summit, Perry decided to share what he did learn in his 12 months "off" about the free-to-play business model, lessons from Asia, and useful time investments for game developers.

The Early Years

Perry opened his discussion with some personal background -- pointing out his home town on a map of Ireland and showing a childhood photo of himself with his sister, he explained that he wanted to be a Concord pilot as a kid, but found out at an early age that he was far too tall to fit into the cockpit comfortably.

His first game experiences were with a Sinclair ZX81 home computer, which saved and loaded programs via an audio cassette player. Unable to afford the tape recorder, Perry bought magazines for the game listings, and used to type in the code of games just to play it once. “It was very, very painful,” he recalled.

His first published game, from Mikro-Gen, was Pyjamarama, one he converted but didn't write, and noted that Pyjamarama's main character was supposed to be Mikro-Gen’s mascot -- so, as the “new guy” at Mikro-Gen, he had to dress up as the character and hand our flyers and stickers at trade shows.

Said Perry, “If you started your career without having to wear a costume and hand out stickers, consider yourself lucky!”

Fast forward a bit to Perry's first licensed game – Teenage Mutant Hero Turtles. “They called them ‘Hero’ Turtles in the UK because they wanted to save children – they thought ninja was too aggressive," explained Perry. "I preferred the Spanish version – it was called Tortugas Ninja! Much better.”

Next he discussed another of his projects, Terminator, and how he used rotoscoping for the characters -- "We made a mistake, as we took all of the footage in front of a shed. We had to do a lot of work to work around that," he recalled.

“If you’re wondering why everyone in Terminator is so tall, that’s because they’re all me," added Perry. "And the man I’m hitting with a plunger there is actually the head of [EA Los Angeles] now.”

He noted that Aladdin, his next game, made over $120 million, and said, “Aladdin was made in 100 days. And so we actually made over $1 million for each day we worked. I wish I could work on more games like that!”

He then discussed the Matrix games – noting that they had problems with a lesbian kiss from Matrix Revolutions and the ESRB. His excuse was that as it was the Matrix, it was actually “two computers kissing” – “and the ESRB bought it!”

Life After Shiny

Perry discussed the sale of his Shiny Entertainment studio to Atari in 2002, and noted that while they did a lot of cool thing, they also did a lot of uncool things -- like Atari-themed underpants -- and their stock price kept dropping. He found he couldn’t get funding at Atari for the huge projects he wanted to make, and so he resigned and waited for Atari to sell Shiny to Foundation 9 – a process that took almost a year.

Perry's next decision? “Take a year off.” He described the work he was doing on his blog, and his forum where he was answering game development questions for students, and how he began to travel from university to university giving talks. Next, he began GameConsultants.com.

“I’ve actually kind of stopped doing this," Perry said. "I still do it, but I’ve really slowed down. In fact, mostly what I do is share my list of contacts. Just go on LinkedIn and add me, and you’ll get access to everyone in the industry.” Perry’s LinkedIn database is about 5 million contacts -- about 30 percent of the entire database.

He consulted on EA’s Simpsons Game, and also thought about trying to make credit cards for gamers – “My favorite is the Pong card – who wouldn’t want that?” He said.

Perry went on to describe his open letter for game development book rights owners, asking them to give their books to him for an online wiki – “I started this and I realized, 'this is a full time job!'" Perry recalled. "So I need to get more people to help me with it. It’s for books that go out of print, for when they’ve stopped making money off it.”

Perry now writes articles for Business Week, and is on the board of the Hollywood and Games Summit, where he gave a talk earlier this year. He also took a few classes. "A lot of them aren't very good, but here are a few I recommend," he said, citing screenwriter David Freeman's advanced class for writing.

Additionally, "I’d never heard of this before - it’s called Wizard Academy, and it’s unbelievably expensive, but you have to take a branding class with Roy Williams. Don’t pay for it, but if a company is willing to send you, go to it!"

He also discussed One Big Game -- “If you agree with what their plans are, get involved and help them out.”

Entering The World Of Free-To-Play

Next, Perry recalled, he got in touch with a man named Howard Marks. Explains Perry, "He bought Activision with Bobby Kotick, and this was when Activision was totally destroyed. They bet the farm on CD-ROM, and this was at a time when cartridges were the main way to sell games- but it paid off. He’s just bought Acclaim and is betting the farm on free-to-play games. Now, people who bet the farm are impressive to me.”

Perry said that free-to-play games are a concept they decided to look at because they were a major way to play games in China and the rest of Asia, and China's game industry is growing faster and faster and catching up on the US. So he decided to go to China to check out the game development community and visit the China Joy Expo.

“It’s an anything goes-atmosphere," he said, showing images of people selling luggage on the show floor to demonstrate. Next, he showed a picture of Chinese clowns at the Expo. "When then I saw those clowns, I felt real sorry for them, because I remembered those days."

He went to see a company and give a talk, and he showed an image of him with the entire staff, all of them staring at the camera rather intensely. "See how all of these people are looking at you?" Perry pointed out. "They really are looking at you. They’re watching everything you do, and playing every game you make, and they’re analyzing it and learning from it. It’s actually a little spooky.”

He then went on to describe his work with Nexon's Korea-based dancing MMO Audition, and how he became interested in it and interested in localizing it for the US. After speaking with the developers and giving them some hints and tips, he suddenly ended up with them asking him to take control of 3 MMO teams in China.

Putting More On The Plate

Perry continued, "So suddenly, remembering this is my year off, I suddenly have 3 fully-funded MMO teams in China. And I don’t speak any Chinese, so thank God for their producers!”

He described some of the interesting things they do in the game to build community, such as “punishments” for losing. Losers, for example, might have to wear panda suits. “Now, you’d think what the hell is that, we have to get that out of the game for America," says Perry. "But the thing is that it works as an ice breaker – it makes people start conversations and laugh about it together.”

He described how in the game, people can become couples, enter couples competitions and even have virtual marriages which could lead to virtual divorce.“We have teenagers getting 'divorced!'" Exclaimed Perry. "It’s crazy! The big question is, will it work in the U.S., though? I have no idea.”

He discussed some complicated licensing issues. "In China they don’t care about copyright," he explained. And the team ended up doing a deal with Warner music group. “It’s an example of the new relationships that we are forming now that are trying to push free-to-play forward," Perry noted.

Perry moved on to discuss Seoul and the Gstar expo. “compared to China Joy it’s a little more sedated, but it’s pretty similar.” He showed an image of a girl in a padlocked cage, with attendees doing push-ups to win the girl, and “Korean developer speed dating” where one can meet developers and be shown their game in a kind of speed-dating setting -- lots of small, two-person tables with laptops, he explained.

He talked about going to visit GameHi because he liked the look of an FPS they had, Sudden Attack -- "and they had this MMORPG that I liked the look of, and so suddenly, boom! I had another MMO! it was called Dekaron, and it had this Korean story which we rewrote entirely – a 4000 page story - and called it 2Moons, and released it in the USA for free. And most importantly, it had no development cost. The game immediately charted and it’s only in beta! It charted higher than Lord of the Rings Online.”

Monetizing Free Games

“In-game advertising is something that they don’t find very interesting over there, but here it’s different,” Perry continued. He discussed how he went to a Raiders game at McAfee Coliseum and how the stadium was covered in billboards and other advertising around the field.

“Players will have no problem with advertising if you don’t charge full price for your game and then include a little bit of paper that tells people that you’re sending their IP address to agencies and cover the game in adverts," Perry joked, referring to player backlash over Battlefield 2142.

Another condition required for players to accept in-game ads is that you: "Don’t delay or interrupt the gamer at any time with advertising, or require them to click anything to get rid of it," cautioned Perry. And finally, he advised, "Give them something valuable in return - obviously a free game is great. Make advertising an exchange."

He concluded, "If you compare this to TV, TV fails on every point. That’s why TV is dying and we’re going to kick TV’s butt."

The Evolution Of In-Game Ads And Item Sales

He then discussed how in-game advertising has evolved from banners and static billboards into advertisements interwoven with the story, and noted that they take great pains to offer optional advertising that the player can turn off. “We want to say that our game is totally free, so players can turn it off - but gamers who turn it on receive an XP boost," explained Perry. "96 percent of gamers want the experience boost.”

Perry also highlighted four key points regarding item sales. Firstly, don't charge too much. Secondly, don't upset the game balance -- in other words, don't make winning something that can be bought. Third, don't take what Perry calls "the velvet rope" approach, by disabling the fun parts and making players pay to unlock them. And finally, don't allow hackers, bots or fraud to devalue everything.

"In 2Moons we actually have a jail, so you can walk by and actually see the bots in jail,” Perry said.

He then discussed ideas for selling items, and noted, “The point is that you might not like any of these, and think they suck, but these are all ideas that are being experimented with. It really it is the Wild West.”

Going Down The Wrong Road?

Perry expressed that the rising cost of games is a move in the wrong direction. “There is a growing wall in front of poor gamers, and every year we place another line of bricks on the top of the wall to make it harder for them,” he said. But wealthy gamers want the full experience and money, so how about flexible pricing?

According to Perry, the only truly honest model for games is "crappy games = zero sales." He added that: “As long as the free games from China stay bad, then there’s no problem, but if they start to get it right -- create an Assassin’s Creed, a Mass Effect, a Super Mario Galaxy -- and for free, then we’re going to be in real trouble.”

Perry said he has no idea why he hasn't self-destructed after his busy year, but offers a few suggestions: "Every day make sure you’re doing something to grow your career. And if you have time -- you won’t think you have time, but you can make time -- try to pay something back into the industry.”

In answering questions, he noted that Chinese companies were worth billions of dollars, and could lead to a lot of disruption: "You should not be surprised if Epic or someone gets bought by a Chinese company," he cautioned. "And how would you feel if that would happen? I’m not trying to be all doom and gloom, but there is a lot of disruption is possible.”

Also in response to a question from the audience, he made a response to Jonathan Blow’s ethical questions about MMOs. "It’s hard to argue with free," Perry said, "People saying, 'I’m not paying for this unless I love it.'”

Concluded Perry, “After 25 years in the business, I’m stunned as to how wide-open this business still is. There are so many creative ways to still make a difference.”